Premier Breakfast

Introduction by Herbert Phillipps Jr.

We would like to thank the three premiers who have joined us for taking their time out from their busy schedule to come and answer your questions today. They are Premier Bob Rae, Premier Gary Filmon of Manitoba and Premier John Savage of Nova Scotia.

The annual Premiers' Conference is in its 35th year although it can be traced back to the occasional meetings of the premiers that began in 1887. Discussions at these highly visible forums focus mainly on major federal-provincial issues. At this year's conference the agenda is made up of four substantive issues-inter-provincial trade, federal-provincial relations, social policy and aboriginal matters. No doubt Quebec and Confederation will be discussed with the Quebec provincial election just two weeks away.

I would like to say a few words about today's programme. Premier Rae will give a brief address on the conference and the major issues on the agenda. Following that, he and the Premiers Filmon and Savage will answer your questions. You will notice that there are two microphones on the floor set up so that you can ask the questions. I request that you approach the microphone so that they can be recorded by radio and television as well as for the rest of the audience here so they may hear your questions.

Without further hesitation, I would like to call upon Premier Bob Rae.

Bob Rae

Thank you very much, Herb. Members of The Canadian Club and The Empire Club, my fellow Premiers and supporters all: I am delighted to be here today to talk to you briefly about the Premiers' Conference and answer some of your questions. I hesitate to say "answer" (or "not answer") but we will do our best to address the issues that you raise. It is a great pleasure and an honour for us here in Ontario to be welcoming the Premiers. This is a traditional meeting that has been held for a great many years, and I've been attending them since my election in 1990. I'd just like to make a few points about what's been happening recently in terms of the co-operation of the provinces with the federal government and about what I see as an emerging approach that, I think, is more emergent now among the provinces and among governments than at any time in recent history.

First of all, let's look at the economy. I will touch very quickly on what's happening in Ontario and then turn to some of the other changes that are underway. It's important to remember that total employment across the country is now almost back to the peak that was reached in April of 1990. The unemployment rate has fallen from eleven and a half per cent in January to just over 10 per cent in July. Here in Ontario, the unemployment rate is under 10 per cent at 9.6. From February to July the Ontario economy created 90,000 net new jobs. All of this increase has been in the full-time job category. Job creation has taken off and we now feel very strongly that it will continue to grow as the economic recovery strengthens. Our real GDP is expected to grow by over three per cent in 1994, and for 1995 through to 1997 we project it will grow by over four per cent. While that's happening, we should be creating well over 100,000 new jobs per year, every year through to 1997.

So as your premier I say this with some emotion: after a number of years (1989, 1990, 1991) in which we were not going in the right direction in terms of our economy, now we really are. Growth and government spending are firmly under control. We are creating thousands of new jobs, deficits are coming down. Business and consumer confidence is rising. Exports are up over 13 per cent this year over last, and last year was a record year over the year before. So it really is a remarkable turnaround.

I've deliberately asked a Western premier, and an Atlantic premier, a member of the Liberal Party and a member of the Conservative Party, to join me on the platform. No doubt there will be some differences among us, but by and large ( hope the Premiers will agree) there is a remarkable degree of consensus among all the premiers about what now is happening and what needs to be done. And this is a very significant change for Canada. I don't think we should underestimate the importance of the very strong degree of consensus among us. We agree that job creation is the top priority and that structural changes must be completed to make the economy strong. I've asked Premier Filmon to lead the discussion on removing barriers to trade within Canada. That was the basis of a recent federal-provincial trade agreement and we are continuing work to strengthen and extend that agreement. There's consensus that our social security system needs to be reformed to move it along the road from passive income support to active preparation for the job market. There's a very strong consensus that the links between schools and the job market should be stronger in order to give young people a more effective transition from school to work.

Each province is undertaking these changes and reforms. If you talk to people in Saskatchewan, or British Columbia, or Nova Scotia, or Prince Edward Island, or wherever you like, you discover that our health-care system is one of our great national treasures. But it too must be renewed. We must do more to make sure that there are stronger disease-prevention and health-promotion measures in place, that we are doing more to assist the community, that we are able to deal effectively with the problems and challenges of an aging society and that we've got the resources to do that without constantly spending new dollars.

What happened in the eighties was that budgets kept going up almost out of control in response to a series of demands. We've all had to learn the hard way that we want to protect and preserve our universal system. That requires strong leadership and some very tough decisions. There's consensus that governments shouldn't do things alone. We have to forge effective partnerships with business, labour and social organisations. Again, in every province, you will find an attempt to build consensus within that province, an effort to get groups to work together, and a determination to see governments themselves doing things differently and working more effectively with the private sector, as we begin to define and understand the differences between governing, running and administering. There's a broad consensus that governments have to be more efficient, that we have to live within our means, and that duplication and waste have to be eliminated.

Now I think it's important for people to realise that we have decided that we're going to use this conference as an opportunity to build on the particular experiences and achievements of all of our governments. There are particular ways in which we now have to go. Ministers of education, for example, have been working together. None of this, I should say to you, is particularly spectacular; none of it is terribly glamorous. I saw one news article the other day saying that this conference was going to be rather dull. Well, I'm sorry. As much as some would like us to be, we are not in the entertainment business. We're in the business of governing, trying to find solutions and finding practical ways of making the Federation work better and of making the lives of our citizens better. It is hard work. It's not glamorous. But the next logical step for us is to determine how we can take the work that we are doing together and make sure that we are sharing as much information as possible between us, and that we are not reinventing the wheel or even, on occasion, reinventing a square wheel in each jurisdiction. There are some things that we can do better or cheaper as a group than we can do alone. Internal trade is one example. The enforcement of child support orders is another example. Trade missions abroad, educational standards, securities regulation--these are all areas where, I think, there is a growing consensus. We'll see how strong it is at the meeting and we'll see precisely how much progress we can make in these areas.

My own view is that we now have an opportunity to move beyond these general areas of agreement in order to achieve some more concrete results. Let me just talk to you in some greater detail about the agenda. The meeting will be a working meeting, and you're entitled to know what the work will be over the next day and a half. The first morning will be devoted to economic issues. We will discuss internal trade. The agreement that first ministers signed last month was the result of years of concerted work by provincial ministers and by federal public servants. We hope very much that we are going be able to take the next steps.

Premier Johnson and I were able to agree on the need to create a much stronger common market for public procurement and for an exchange of contracts, and for our companies to be able to bid in both provinces. This was a very hard-won achievement that has made an enormous difference. It has created a much bigger market, much greater mobility and much greater opportunity for workers and for businesses on both sides of the border. Within Atlantic Canada, there are some very exciting steps being taken by the premiers to create a common market for procurement. Within the Western provinces there has emerged a very strong working relationship that crosses party lines and transcends particular election results; one which tries to build a working agenda that persists through time. I hope very much that as provinces we can build on that in this conference.

We're going to be talking about job creation and about the infrastructure programmes. I'm obviously going to be talking about our pride in jobsOntario, our sector strategies, our partnerships with municipalities and the work that we've been doing on job creation and job training. We're going to be focussing on agriculture. This is an industry that's important to all the provinces. It is facing enormous challenges due to the new trade rules, the GATT and the NAFTA, which have had a very significant impact on our farmers.

Obviously, we are going to be talking about how we can work in a concerted fashion to deal with the impact of protectionism with respect to our most important trading partner, the United States. We're going to be talking particularly about how we might combine our efforts to promote Canadian exports, because frankly we're beginning to realise that there's no merit in our continuing to duplicate the work that we are doing. If we work together in a concerted fashion, selling Canada together and selling Canadian businesses and exports together, we can do a better job.

We've had good success with the federal-provincial infrastructure programme. We want to learn from that programme and talk about how perhaps we can renew it, extend it, deepen it, and broaden it. Over lunch, and immediately after, we are going to be discussing inter-provincial co-operation. I want to suggest to you that what is unfolding is a new practical working model of the Federation. The provinces have begun some significant co-operation in the area of internal trade. It has taken too long. I agree with those people who say it has taken a long time. It has, but now that we have developed some momentum, we should be building on it. Our education ministers, as I said earlier, have been meeting regularly over the last three or four years to develop common standards across the country. They insist that we must understand the importance of accountability within the system so that we become more focussed on results and not simply on process. Work should not be done by allocating authority to some new body, but by our working more effectively.

We can, in fact, develop a new practical approach to federalism, to the Federation and to improving services. Indeed there are many areas in which the provinces spend the money, have the clear administrative responsibility and are working together. I mentioned education. I mentioned health care, social assistance, internal trade and research and development in our universities and companies together.

I think that this emerging approach in which we begin to build not from the top down, but to build from within the Federation will in fact strengthen the ties between us. This approach has a great deal to offer and it means a great deal to all of us. You can see from all the areas that I've described and from the differing provincial experiences, will emerge some common realities. And now we, in turn, are saying how we can effectively do our job and how we can assist in getting the focus of the country back on jobs, on work, on training and education, on managing our social policies so that they treat people fairly and at the same time respect the need for us to live within our means.

Finally on Thursday morning we will meet with the leaders of the five national aboriginal organisations to discuss issues of mutual interest. Obviously we are going to be determining how we can continue on the agenda for self-government and for improving the relationships between native peoples and the provincial governments.

My grandmother, who passed away earlier this year, used to say, "Take the human footsteps." And that's what the premiers are doing. We have, I think, been chastened, and we have been made modest by virtue of the very tough experiences that we have faced together. In the specific areas that I have described we feel the need to take the human footsteps to make progress towards a practical working model of the country and a working model of federalism that improve the country. If I can paraphrase Winston Churchill: "It may not be the perfect system, but it's a better system than any of the others." And it's one that we are constantly striving to improve, to give hope and cause for real confidence from the citizens of the country. If our targets can be reached, and if, in fact, we attain them, then we will indeed have made progress. If we don't make all the spectacular headlines that perhaps at one time or another we might have wanted to make that might even be a sign of success.

So I welcome Premier Savage and Premier Filmon to join me on the platform. I know that they'll have some comments to make and a very constructive approach to the discussion. We look forward to answering any of your questions. Thank you very much.

Question

I'll take a crack at a question. About the separation or sovereignty of Quebec, I have to say that Quebec is Canada, and always should be part of Canada. When you cut off a limb or a piece of you, it becomes a phantom, and then you must live with the eternal consequences. That's a statement that I just would like to put forward for consideration. Find a solution for keeping Quebec in Canada. The second thing is health care. I'm in the private sector in health care in Ontario. Rather than fear the private sector, look at us as partners. We can economically assist in the delivery of a quality health-care system. Thank you.

John Savage

Thanks very much, Bob. Let me say, first of all, on the issue of Quebec our policy has been that this is an election for the Quebecois. We are determined to make it abundantly clear that as far as Nova Scotia is concerned, the people of Quebec are very welcome in Confederation. But we will not interfere in the election in any way. We don't think that that would be very productive.

The issue of health care is obviously an issue that is very important for me. As a family doctor for 30 years, I've seen it from the inside (a bit like some of the education ministers I guess). We're going through major reforms in health care. As part of our changes in putting ourselves back on our feet we have had to reduce the cost of health care. For the first time in the history of the province, hospitals have been closed. Nearly everybody has gone through this. But previously, people won elections by opening hospitals. They sure didn't win them by closing them, I can tell you. But like all provinces, we have too many beds, too much institutional health care, too much focus on a model that served us well but is outdated. I couldn't have written the bit in your speech any better than you did. We've got to transfer health care to the community. We've got to have better home care and better pre-hospital care. This is a very important issue for us, but it is not an easy one because people love their hospitals. If you've spent time in Brantford, or in any place in Ontario where your hospital has been important, and if you've worked on everything from cake sales to auxiliaries, you know that the hospital is a very, very sacred institution for most communities. To take that away, even though there's another one down the road, is a very, very difficult thing to do. It's not easy, but it has to occur. The costs have to be changed so we'll have what we would call a sustainable health-care system. We think at the end of a couple of years we'll have a much better health-care system. It will be focussed on the community, and it will be focussing on other professionals as well as doctors. We'll have a better health-care system. We have to sell that, however, at a time when people are cynical not just about health care but also about us.

Gary Filmon

I certainly would say that every premier at this conference will be telling the people of Quebec that Canadians want Quebec to remain a strong part of our country and that we all believe Canada is better with Quebec as a part.

With respect to health care, it's an interesting comparison to what we used to see when I was in cabinet in Manitoba back in 1981. We used to hear provinces boast about how they had so many more beds per capita than the next province, how they spent a greater proportion of their provincial budget on health care or had greater per capita expenditures on health care. Today, we're all wrestling with the same problem and that is that after two decades of increasing our expenditures on health care, which almost doubled the rate of inflation, none of us can sustain the systems with which we came into government. And we're all trying to do two things simultaneously. One is to make the system more effective and more efficient for the users of the system and to do so with less money. And we're all working very, very diligently at it. I would say from my perspective that, just as Premier Rae has indicated, these are not partisan issues. I could bring Premier Savage, Premier Rae and Premier Romanow into my province and have them talk about these challenges and the things that have to be done in order to sustain health care as we know it for the future and keep it the best system in the world (which I believe it is). But it's not a partisan issue. We really are faced with the same problems and challenges and we're seeking similar solutions, as it turns out, We have much to gain by comparing our views. So I don't think that we have a hangup about utilising private-sector initiative, if it can make the delivery of our health care more effective for the use of the patient and if it can keep our expenditures down as they must be kept down in future. That's the one difference of today versus the last two decades. I saw a slide that was shown by some consultants that we brought in. They said that governments in Canada today can expect their revenues to increase in the 90s at about half the rate they did in the 80s and a quarter of the rate they did in the 70s. So we aren't going to have money to solve any of our problems. That's really what we're faced with, so we're looking for solutions. If they involve opportunities for private initiative to deliver services or to improve our institutional care. I don't think too many of us have hangups about that.

Question

I wonder if the premiers would have any comments or suggestions as to how Canada, as an exporting nation, can gain back her markets that are being raided through subsidies and maintain a healthy resource sector that will be self-sustaining.

Premier Filmon

It's an interesting point you make, because the front page of The Winnipeg Free Press on Saturday had a story outlining the tremendous success that Manitoba in particular and Canada in general have had in exports. Premier Rae alluded to this success. I think he talked about an 18 per cent increase in Ontario's exports for six months of this year. This follows a record increase of our export sales last year (that was, I believe, 18 per cent over the previous year). For six months of this year, Manitoba's exports to the U.S. have increased 37 per cent and to the rest of the world 31 per cent. So we're on a real roll in terms of our competitiveness internationally and our ability to access international markets. This is probably to some degree due to the devalued dollar but it is also due to the fact that in many areas we have the best quality product in the world--this particular Durham wheat, our hogs, our beef and so on. And in our manufactured goods as well. I don't think that there is a problem there. I think that if you look at the success of your own automobile industry you've overcome (as North America in general has) the quality problems that enabled the Japanese and the Europeans take over much of our North American auto market in the 1980s. That's changed very dramatically in a matter of just a couple of years. In terms of price and in terms of competitiveness, we're in a good position with almost everything we produce in this country. I see it as the major source of our growth in the near term. So whatever the problems have been, I think that we have been working hard and are on the right track to solving them. Exports are going to fuel our economy for the foreseeable future.

Premier Savage

Despite previous troubles with the Atlantic fisheries, fish exports are up this year because of lobster, scallops and other species. We are still doing a lot of value-added catching of fish that come in from the Bering Straits. Much of the cod and the ground fish we get is not from off our shores. It's off other people's shores.

One cannot but be concerned about the dwindling resources not just of North Atlantic cod but also of fish stocks world wide. I think the point about how those resources have been raped is very valid. Pulp and paper prices are up. We have more people employed in that industry now than we did last year. The exports are going up. It's the best year in mining exploration we've had in Nova Scotia for a long time. We are indeed not sharing to the same extent as the others, perhaps, but we are sharing the kind of buoyancy, the improvement and the willingness to spend which we've seen in American tourists this year. We've had more American tourists and more tourists from below the States, which may have something to do with the dollar rather than the beauty of Nova Scotia. But the point is that they're there and they certainly are contributing significantly. Tourism is up maybe eight to 10 per cent. But it's interesting that we all believe that the resource sector, which has traditionally been the source of strength for Atlantic Canada, will in 10 or 15 years be very much less a part of our economic stability than it is now. I think that's inevitable. It's up to us to get into those areas that focus on our high-tech universities in Nova Scotia and into all the opportunities we have in other areas. Our deliberate policy, while not downplaying the significance of the resource industries (because they still play a major part in our province), has to be to get into the twenty-first century. We need a focus different from reliance on resource industries, subsidised or not. That's a reality that I think we're all facing.

Premier Rae

I guess I will just make two points. One is sustainability. I think that in all of our natural resources, I would argue that we must take the steps today to ensure that this way of life will be sustainable on an economic and environmentally sound basis well into the next century.

The second thing is that as a small trading nation, about a third of our GDP depends on access to world markets and on our ability to trade. It's in our interest to work with every other country that wants to build strong international rules with respect to subsidies, open markets and ending protectionism. I think that's the approach that we should take. Anything which, over time, builds strong international rules is going to be to our benefit, particularly with respect to our largest trading partner. We need other friends working with us to deal with the impact of American protectionism. But I don't think we're ever going to find a perfect solution. The GATT is, by its very nature, an agreement among politicians at an international level. It doesn't reflect any particular political or economic theory. It's always going to be a compromise. But we're better off today than we were five years ago in terms of strengthening the GATT Strengthening the ability of the world trading organisation itself is a plus for us as a small country, because it means we have access to rules which are independent of political power and that's what's essential for us as a smaller trading country. So I guess I would just say that those are the sorts of things that we seek. In terms of sustainability, again, I think we are all working hard.

Question

Is there any kind of rationalisation of government taking place? For instance are you considering doing anything with school boards? Are you considering doing anything with regional or local government? We have to reduce the numbers.

Premier Rae

I guess I could answer briefly on behalf of my government. The answer is yes. I'll let Premier Filmon and Premier Savage continue.

Premier Filmon

The answer is that your view is universal. We're in the midst of a review of school boundaries that is intended to reduce the number of school districts in Manitoba dramatically. We have 11 different school districts in Winnipeg, a city of about 650,000, so the problem is universal. I think the solutions are being craved and called for by people everywhere. Municipal government is exactly the same way. The number of people we have in government is ludicrously high.

Premier Savage

I think that's true. But let's look at one point. Politicians don't cost you as much money as your bureaucrats. The politicians are relatively cheap. I bet you in our government (and you can answer this with respect to your governments), deputy ministers get more than the premier. They certainly get more than cabinet ministers, an average of $10,000 to $15,000 more than the politicians get. I don't know about the others. Yes, it is very true. We are over-governed. A poll coming out reinforces what you're saying in our province. Seventy per cent of people believe that amalgamation of municipalities is necessary. We've started one in a long-overdue area, industrial Cape Breton. The bill has gone through the House of Assembly and we're bringing together eight municipalities, six of which have been on emergency funding for a long time to create one municipality. The biggest risk is that seven administrators, seven chiefs of police, seven fire chiefs, seven of whoever are going to be added to the unemployed in Cape Breton. That's a small price to pay, I suspect, for bringing together better, more efficient government.

The other thing that we should be looking at is in the area of federal-provincial overlap. I'm sure most of you realise that we have both federal and provincial prosecutors. We have both federal and provincial parole officers. We have stacks overlapping that we think need to be looked at urgently. In some areas, the federal government contracts for people, and we contract for other people, neither of whom are fully, employed. It just doesn't make sense.

Let me give you another example of better co-operation. How many of you in companies look at the different pension legislation across this country? Why? There are areas where we should be working together and having common principles of portability of pension and common pension standards. Those are the things that perhaps you in the private sector should be pushing us to do in a more cohesive way.

Question

What social programmes can be safely cut today? Which ones are untouchable in your mind?

Premier Rae

I don't think it's a matter of cutting or leaving sacred. I think it's a matter of what we ought to be able to do as a country, should be able to afford as a country and ought to be able to sustain. I think that with respect to welfare and unemployment insurance, particularly with respect to welfare (which is under our responsibility as provinces), there's a very strong agreement among premiers (we discussed it at our last meeting) that we have to create an understanding across the country that welfare should not be a permanent destination. It should be a point of transition that some people have to rely on because their unemployment insurance has run out and they have no other source of income. We have to do everything we can to make that system closer attuned to the labour market, more attuned to training and more attuned to giving people the skills that they will need to get back into the work force and to remain in the work force. The objective of every welfare administrator should be to reduce the welfare rolls, not in a punishing way, but in order to get people back into the work force. And therefore all of us should have a much more active approach in terms of the training that's provided, and in terms of the childcare opportunities that are available, but in particular in ensuring that it is a much more active approach. I think the mistake that has developed over time is that welfare has, for some, become a kind of permanent source of income and support and a permanent way of life. And that is something that needs to change. So it is not a matter of saying what's the principle of helping people who really need help. Providing assistance to people in a decent, civilised way is a very important side of a compassionate society, but it doesn't make sense for us to continue to see it as a purely passive system. We have to become much more active in terms of getting people back into the work force.

Question

What is actively being done to continue to reduce our debt load?

Premier Rae

The short answer is that we've reduced our deficit by more than 30 per cent over the last two years. In the last two years, we've got our programme and operating spending down, which is the first time that's been achieved in the last 52 years in the province of Ontario. So we understand the need to do that. No one here is talking about spending more money on health care, welfare or education. We're all talking about spending it differently and spending it more wisely.

Premier Filmon

Either seven or eight provinces in Canada are on a track to have their provincial budgets balanced by 1996-1997. I know our province is one of them. There is a very strong consensus at the table of premiers that it's absolutely essential to a healthy economic future to get our deficit and debt problem under control.

I'm obviously neglecting to mention one very major level of government that obviously still has a problem and a challenge that aren't being addressed. I think we are in agreement that they have to address theirs as well.

Premier Savage

Since 1978, the Nova Scotia government has not had one balanced budget. We're now in the process of addressing that with a 3-3-2-2 reduction in our expenditures, painful reduction for a province with less than a million people. As a result of that, we are already ahead of target by more than $50 million in the first quarter of this year. We will be in a balanced budget by 1996-1997 and that will be the first time in virtually 20 years that the province of Nova Scotia will have a balanced budget. That's not what we thought we went into politics for, but that's the reality, and that's what we're having to do.

The one thing that companies ask me nowadays, and I don't mean companies in Ontario, Bob--because I don't talk to them under our new friendship rule--is whether, if we were to move, we would move to a province that is managing its own finances. That's what we want to see because that's what you expect us to do. And that's what we will do.

The appreciation of the meeting was given by John Campion, President of The Empire Club of Canada.

A Hippy Writes to the 90s

"Dear Mom and Dad,

I am sorry I haven't written in a long time, but since our dormitory was burned down, during the student demonstration, I haven't been able to see very well. But don't worry. The doctor says there is a good chance I'll get my sight back. While in the hospital, I met a wonderful man who works here. He has convinced me to convert from the religion of my birth. You'll soon have your wish of becoming grandparents. We are moving to Europe and some day, I expect to be married.

Love, Mary.

P.S. There was no demonstration or fire. I wasn't in the hospital. I'm not pregnant. I don't even have a boyfriend but I did flunk chemistry and economics and I wanted you to view these problems in the proper perspective."

In listening to the Premiers here today deal with the complex and sometimes intractable political issues of today, one is reminded of that plaintiff letter and the need for the voters to gauge their performances from the proper perspective.

Many Canadian leaders have provided courageous and insightful leadership through challenging times. They have been asked to steer the political life of their provinces and, in part, this wonderful country of Canada, through the heavy weather of corrosive economic downturn, reduced expectations and public resources and limited public tolerance for further change.

At its most basic, politics represents the continuous adjustment of public policy to meet constantly changing circumstances, perceptions and needs. Leadership comes from recognizing those adjustments before others and articulates them to an expectant public during an election campaign or by discovery while in office. Either way, viewed from a proper perspective, each political leader has chosen unique and innovative solutions to the same old problems. As always, the solutions chosen at each new turn are situate in unknown waters and lead to undiscovered shores. On behalf of both of our Clubs, I would like to thank the Premiers for being with us this morning.